FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning and protections of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. Important factors that could cause actual results to differ materially from the forward-looking statements we make in this Quarterly Report on Form 10-Q and in other reports or documents that we file from time to time with theSEC include, but are not limited to, the following:
• the negative impacts and disruptions resulting from the outbreak of the
novel coronavirus, or COVID-19, on the economies and communities we serve,
which has had and may continue to have an adverse impact on our business
operations and performance, and has and may continue to have a negative
impact on our credit portfolio, stock price, borrowers and the economy as a
whole both globally and domestically; • government or regulatory responses to the COVID-19 pandemic;
• balance sheet and revenue growth expectations may differ from actual results;
• the risk that our provision for loan losses may be inadequate or may be
negatively affected by credit risk exposure; • loan growth expectations;
• management's predictions about charge-offs, including energy-related
credits, the impact of changes in oil and gas prices on our energy
portfolio, and the downstream impact on businesses that support that sector,
especially in the
• the risk that our enterprise risk management framework may not identify or
address risks adequately, which may result in unexpected losses;
• the impact of the transaction with MidSouth or future business combinations
upon our performance and financial condition including our ability to successfully integrate the businesses; • deposit trends; • credit quality trends; • changes in interest rates; • the impact of reference rate reform; • net interest margin trends; • future expense levels; • improvements in expense to revenue (efficiency ratio); • success of revenue-generating initiatives;
• the effectiveness of derivative financial instruments and hedging activities
to manage risks;
• risks related to our reliance on third parties to provide key components of
our business infrastructure, including the risks related to disruptions in
services or financial difficulties of a third-party vendor;
• risks related to the ability of our operational framework to manage risks
associated with our business such as credit risk and operation risk,
including third-party vendors and other service providers, which could among
other things, result in a breach of operating or security systems as a result of a cyber-attack or similar act; • projected tax rates; • future profitability;
• purchase accounting impacts, such as accretion levels;
• our ability to identify and address potential cybersecurity risks,
heightened by the increased use of our virtual private network platform,
including data security breaches, credential stuffing, malware,
"denial-of-service" attacks, "hacking" and identity theft, a failure of
which could disrupt our business and result in the disclosure of and/or
misuse or misappropriation of confidential or proprietary information,
disruption or damage to our systems, increased costs, losses, or adverse
effects to our reputation;
• our ability to receive dividends from
liquidity, including our ability to pay dividends or take other capital
actions;
• a material decrease in net income or a net loss over several quarters could
result in a decrease in, or the elimination of, our quarterly cash dividend;
• the impact on our financial results, reputation, and business if we are
unable to comply with all applicable federal and state regulations or other
supervisory actions or directives and any necessary capital initiatives;
• our ability to effectively compete with other traditional and
non-traditional financial services companies, some of whom possess greater
financial resources than we do or are subject to different regulatory standards than we are;
• our ability to maintain adequate internal controls over financial reporting;
• potential claims, damages, penalties, fines and reputational damage
resulting from pending or future litigation, regulatory proceedings and
enforcement actions, including costs and effects of litigation related to
our participation in stimulus programs associated with the government's
response to the COVID-19 pandemic; • the financial impact of future tax legislation; and • changes in laws and regulations affecting our businesses, including
legislation and regulations relating to bank products and services, as well
as changes in the enforcement and interpretation of such laws and regulations by applicable governmental 43
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and self-regulatory agencies, which could require us to change certain
business practices, increase compliance risk, reduce our revenue, impose
additional costs on us, or otherwise negatively affect our businesses.
Also, any statement that does not describe historical or current facts is a forward-looking statement. These statements often include the words "believes," "expects," "anticipates," "estimates," "intends," "plans," "forecast," "goals," "targets," "initiatives," "focus," "potentially," "probably," "projects," "outlook," or similar expressions or future conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements are based upon the current beliefs and expectations of management and on information currently available to management. Our statements speak as of the date hereof, and we do not assume any obligation to update these statements or to update the reasons why actual results could differ from those contained in such statements in light of new information or future events. Forward-looking statements are subject to significant risks and uncertainties. Investors are cautioned against placing undue reliance on such statements. Actual results may differ materially from those set forth in the forward looking statements. Additional factors that could cause actual results to differ materially from those described in the forward-looking statements can be found in Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the year endedDecember 31, 2019 , Part II, Item 1A. "Risk Factors" in our Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2020 , Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q, and in other periodic reports that we file with theSEC . You are cautioned not to place undue reliance on these forward-looking statements. We do not intend, and undertake no obligation, to update or revise any forward-looking statements, whether as a result of differences in actual results, changes in assumptions or changes in other factors affecting such statements, except as required by law. OVERVIEW Non-GAAP Financial Measures Management's Discussion and Analysis of Financial Condition and Results of Operations include non-GAAP measures used to describe our performance. These non-GAAP financial measures have inherent limitations as analytical tools and should not be considered on a standalone basis or as a substitute for analyses of financial condition and results as reported under GAAP. Non-GAAP financial measures are not standardized and therefore, it may not be possible to compare these measures with other companies that present measures having the same or similar names. These disclosures should not be considered an alternative to GAAP. A reconciliation of those measures to GAAP measures are provided within the Selected Financial Data section that appears later in this item. The following is a summary of these non-GAAP measures and an explanation as to why they are deemed useful. Consistent with Securities and Exchange Commission Industry Guide 3, we present net interest income, net interest margin and efficiency ratios on a fully taxable equivalent ("te") basis. The te basis adjusts for the tax-favored status of net interest income from certain loans and investments using a statutory federal tax rate of 21% to increase tax-exempt interest income to a taxable equivalent basis. We believe this measure to be the preferred industry measurement of net interest income, and that it enhances comparability of net interest income arising from taxable and tax-exempt sources. We present certain additional non-GAAP financial measures to assist the reader with a better understanding of the Company's performance period over period, as well as to provide investors with assistance in understanding the success management has experienced in executing its strategic initiatives. These non-GAAP measures may reference the concept "operating." We use the term "operating" to describe a financial measure that excludes income or expense considered to be nonoperating in nature. Items identified as nonoperating are those that, when excluded from a reported financial measure, provide management or the reader with a measure that may be more indicative of forward-looking trends in our business. We define Operating Pre-Provision Net Revenue as total revenue (te) less noninterest expense, excluding nonoperating items. Management believes that operating pre-provision net revenue is a useful financial measure because it enables investors and others to assess the Company's ability to generate capital to cover credit losses through a credit cycle. We define Operating Earnings as reported net income excluding nonoperating items net of income tax. We define Operating Earnings per Share as operating earnings expressed as an amount available to each common shareholder on a diluted basis.
Impact of COVID-19
Much ofthe United States began the second quarter of 2020 with some degree of mandated closures for non-essential businesses to allow for social distancing measures in an effort to slow the spread of COVID-19. The economic fallout from the closures has resulted in significant economic harm nationally and across the footprint we serve. Incidence of infections has increased in our footprint in 44
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recent weeks, resulting in delays in planned phased economic reopenings. The fiscal stimulus packages announced in the latter part of the first quarter, including direct payments to consumers, unemployment benefits, and Paycheck Protection Program (PPP) loans, have helped to ease the negative impact to some extent. According to theBureau of Economic Analysis , consumer spending increased 8.2% in May following declines of 6.6% in March and 12.6% in April. Further, according to theBureau of Labor Statistics , the national employment market has experienced recent growth, with 2.7 million jobs added in May and 4.8 million in June across a variety of industries, most prevalently in the hospitality industry. Despite the recent growth, industries where we have significant concentration remain under financial pressure. Unemployment rates across our footprint are trending favorably since peaking in April. The impact to our business will be contingent upon the pace and success of business reopening measures in our markets, advancements for treatment and/or vaccines, and restoration of consumer confidence, which would allow for a successful restart of the economy. Timing and success of these items are difficult to predict; therefore, significant uncertainty exists for the near term. These economic conditions have been reflected in our second quarter results most notably through the allowance for credit losses and losses associated with a sale of a portion of our energy portfolio, discussed in more detail below. The Company utilizes economic forecasts produced byMoody's Analytics (Moody's) that provide various scenarios to assist with the development of our outlook. These forecasts are anchored on a baseline forecast scenario, which by definition reflects a 50% probability distribution that the economy will perform better or worse than the forecasted baseline parameters. Several upside and downside scenarios are also provided that are derived from the baseline scenario. TheJune 2020 baseline scenario reflects the continued damage caused by the pandemic on the global economy with a sharp and severe recession that began in the latter part of the first quarter and continued through the second quarter. This scenario assumes the worst of the economic fallout from the virus occurred in the second quarter and that recovery begins in the third quarter of 2020, but at a slower pace than forecasted in theMarch 2020 scenarios. Key underlying assumptions are that (1) a second wave of the virus that seriously disrupts businesses again is not expected, (2) a vaccine will be made widely available in summer 2021, and (3) to support the economy, lawmakers will pass an additional stimulus bill in the second half of 2020. Further, the forecast includes the assumption that theFederal Reserve will continue to respond to the economic damage by maintaining rates at near zero until late 2023, providing liquidity to short-term funding markets, maintaining reduced bank capital, liquidity and reserve requirements, and utilizing unlimited quantitative easing through purchases of treasuries and agency mortgage backed securities. The alternative Moody's forecast scenarios have varying degrees of positive and negative severity of the outcome of the economic downturn, as well as varying shapes and length of recovery. Management determined that assumptions provided for in the stronger and slower near-term growth scenarios (S-1 and S-2, respectively) were reasonably possible, and as such, the S-1 and S-2 scenarios were given consideration through probability weighting in our allowance for credit losses calculation atJune 30, 2020 . We believe the alternative scenarios provided for are less likely to occur than baseline and have weighted them accordingly in developing our overall economic outlook. The extent to which observed and forecasted economic conditions deteriorate or recover beyond that currently forecasted may result in additional volatility and allowance for credit loss builds or releases in the future. Changes in the depth and duration of these unprecedented economic conditions may also require revisions to our currently forecasted cash flows that could result in impairment of certain intangible or other assets in future periods. Our response at the outset of the pandemic was proactive and continues to be adaptive to current and forecasted economic and social conditions. Business continuity plans continue to be effective in maintaining operations and we continue to meet the needs of the customers we serve. Our online and mobile banking applications have also allowed us to continue to assist our customers. A mix of corporate service team members continue to support our operations effectively remotely. We have continued to take appropriate measures to maintain our liquidity and strengthen our balance sheet while maintaining solid capital levels. These measures include, among other things, increasing our line of credit with theFederal Reserve to$4.7 billion and increasing other internal sources (i.e. free securities and balances kept at theFederal Reserve ) to$3.9 billion , to provide total net liquidity of$17.4 billion atJune 30, 2020 , an increase of$3.4 billion linked quarter. These measures have allowed the Company to continue to effectively support and participate in the various economic relief strategies employed at the federal level and provide loan payment deferral options in response to the pandemic to assist new and existing customers. In mid-May, deferral modifications of principal, and/or interest, under this program peaked at$3.6 billion . Demand or need for such modifications has diminished significantly since then, with$2.7 billion and$1.4 billion on active deferrals as ofJune 30 andJuly 15, 2020 , respectively. The Coronavirus Aid, Relief, and Economic Security ("CARES") Act, as amended, contains substantial tax and spending provisions intended to address the impact of the COVID-19 pandemic, including PPP, a$659 billion program designed to aid small- and medium-sized businesses through federally guaranteed loans distributed through banks. As ofJune 30, 2020 , the Company had originated 12,662 PPP loans totaling$2.3 billion to our customers, approximately 89% of which were in amounts less than$350,000 . The fees earned by originating these loans will be accreted into interest income over the expected life of the loans. Our second quarter results include$17.4 million of fees and interest attributable to these loans. Many of the PPP loans originated were self-funded, as recipients placed PPP loans in deposit accounts at the bank. This extra liquidity improved our net interest margin but negatively impacted service charges on deposits and certain other noninterest income items. 45
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Two other strategic actions taken included successfully raising$172.5 million in subordinated notes and the opportunistic disposition of$497 million of energy-related loans. The issuance of the subordinated notes, which have a 40 year maturity and 6.25% interest rate, are included in tier 2 capital, providing additional capital to help support, among other things, the execution of an overall de-risking of the balance sheet, including the energy loan sale. Following these transactions, the Company remains in a solid capital position with an excess over regulatory required capital levels, including the capital conservation buffer. The execution of the energy loan sale has more closely aligned our asset quality metrics with peers and has provided for more granularity in the loan portfolio. As noted above, our customers have taken measures to enhance their liquidity, with significant draws on existing credit lines at the end of the first quarter, participation in PPP, and seeking loan payment deferrals. Excluding the impact of PPP, there was contraction of the portfolio due to repayment of amounts drawn in first quarter compounded with general lack of loan demand. As funding from government sponsored relief programs is utilized and economic conditions remain depressed, loan demand will likely continue to fall in the near term. Also, with historically low interest rates and as the effects of fees earned on PPP loan diminish, pressure on the net interest margin will continue. On a positive note, customers have taken advantage of the favorable rate environment to refinance existing mortgages or purchase homes, which contributed favorably to the income from secondary mortgage operations during the second quarter. Increased mortgage origination volume will likely continue, albeit to a lesser extent, in the short-term with the expectation of returning to typical levels by the year's end. We continue to monitor and respond to the impact of the pandemic closely, as well as any effects that may result from the CARES Act and future stimulus programs; however, the extent to which the pandemic will impact our operations and financial results during the remainder of 2020 and beyond is highly uncertain.
Overview of Second Quarter 2020
The Company reported a net loss for the second quarter of 2020 of$117.1 million , or$(1.36) per diluted common share (EPS). The second quarter loss reflects a provision for credit losses of$306.9 million that includes both an additional reserve build in response to deterioration in the macroeconomic environment from the pandemic and a provision related to the sale of$497 million in energy loans, discussed in more detail below. The Company reported a net loss for the first quarter 2020 of$111.0 million , or$(1.28) EPS and net income for the second quarter of 2019 of$88.3 million , or$1.01 EPS. Subsequent to quarter end, onJuly 21, 2020 , the Company closed on the sale of$497 million of energy loans to certain funds and accounts managed byOaktree Capital Management, L.P. The sale includes reserve-based lending (RBL), midstream and nondrilling service credits. The Company received proceeds of approximately$257.5 million in the third quarter from the sale of these loans. All loans included in the transaction were re-classified as held for sale as ofJune 30, 2020 , and charge-offs associated with the sale are reflected in the Company's second quarter results. The portion of the provision for credit losses related to the transaction totaled$160.1 million (pre-tax), or$(1.47) per diluted share after tax (using a 21% income tax rate). The primary objective of this sale is to continue de-risking our loan portfolio by accelerating the disposition of assets that have been impacted by ongoing issues within the energy industry, and have now been further complicated by the pandemic. As a result of this transaction, both nonperforming assets and criticized loans show significant improvement atJune 30, 2020 , and our energy portfolio concentration was reduced from 4.4% to 1.7% of total loans, excluding PPP loans.
Second quarter 2020 results compared to first quarter 2020:
• Net loss was
provision for credit loss of
share after tax (using a 21% income tax rate) related to the energy loan
sale. Results also include a
primarily to build reserves for sectors hardest hit by the pandemic.
• Strengthened our allowance for credit losses to
total loans or 2.36% of total loans, excluding PPP loans, up from
million, or 2.21% of total loans.
• Net interest margin narrowed by 18 basis points (bps) to 3.23% driven by
lower rate environment.
• Pre-provision net revenue totaled
2020, an increase of
• Net loan growth of
fully insured SBA PPP loans, partially offset by the
loan sale and lower loan demand resulting from the pandemic. • Criticized commercial loans were down$182 million , or 34%, and
nonperforming loans were down
the energy loan sale.
• Total deposits increased
liquidity from PPP and other economic stimulus funds.
• Capital remains solid with common equity Tier 1 (CET1) ratio of 9.77% and
tangible common equity (TCE) ratio of 7.33%; all regulatory ratios are well
in excess of required levels, including capital conservation buffer.
• Liquidity remains strong with over
funding. 46
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The second quarter's results reflect our continued focus on de-risking our balance sheet in light of today's environment. We made a strategic decision to opportunistically divest a large portion of our energy portfolio and, based on updated forecasts, we built a stronger level of reserves for what appears to be a longer and possibly deeper impact to our economies related to the pandemic. Despite those charges, our pre-provision net revenue improved linked-quarter, our capital remains solid and we expect that our actions through the first half of 2020 will provide a stronger reserve with less risk in the balance sheet, which should in turn lead to improved returns for our shareholders. We remain committed to helping both our clients and associates manage through this event. RESULTS OF OPERATIONS Net Interest Income Net interest income (te) for the second quarter of 2020 was$241.1 million , a$6.5 million , or 3%, increase from the first quarter of 2020. Compared to the second quarter of 2019, net interest income (te) increased$17.5 million , or 8%. The linked quarter increase is primarily attributable to a$2.4 billion increase in average earning assets, of which$1.7 billion was the result of PPP loan originations and$0.6 billion was an increase in average short-term investments. The increase in interest income on earning assets was partially offset by negative impacts of a lower rate environment and a$2.5 million decrease in purchase accounting accretion. The increase compared to the same quarter of 2019 is attributable to an increase in earning asset balances, partially offset by the impact of a lower rate environment. The increase in earning asset balances is attributable to PPP loans and the increase in short term investments mentioned above, as well as the acquisition of MidSouth in the third quarter of 2019. The net interest margin for the second quarter of 2020 was 3.23%, down 18 bps from the first quarter of 2020. The decrease is primarily due to the impact of the lower rate environment on earnings assets (11 bps), excess liquidity on the balance sheet in response to COVID-19 (6 bps), a$2.5 million reduction in purchase accounting accretion (4 bps) and a higher level of nonaccrual interest reversals (2 bps), partially offset by the impact of the PPP loans (5 bps) originated during the quarter. The decline in Prime and LIBOR rates negatively impacted the yield on loans by 52 bps as approximately 54% of our loan portfolio is variable rate, with about 90% of those tied to either LIBOR or Prime. Approximately 40% of our variable rate loans have floors, most of which have been reached. Proactive deposit pricing and changes in wholesale funding, positively impacted the net interest margin by 29 bps. Compared to the second quarter of 2019, the net interest margin decreased 22 bps, primarily driven by the lower rate environment that resulted in a 77 bp drop in the earning asset yield, partially offset by a 55 bp drop in the cost of funds. Net interest income (te) for the first six months of 2020 was$475.7 million , up$29.1 million , or 7% from the first six months of 2019. The increase was largely driven by a$2.8 billion increase in average earning assets, primarily due to the MidSouth acquisition at the end of the third quarter of 2019, as well as the SBA PPP loans added during the second quarter of 2020. The increase in earning assets, coupled with a lower rate environment that helped drive down deposit and borrowing costs, was partially offset by the impact of lower yields on earning assets. Net interest margin was 3.31% for the first six months of 2020, down 14 bps from first six months of 2019. We expect the net interest margin to remain relatively stable at current levels during the second half of 2020. We anticipate cash inflows from PPP loan forgiveness during the latter part of this year and lower levels of purchase accounting accretion to be headwinds to our margin, but we expect continued decreased funding costs to offset these factors. Management remains focused on maximizing return on excess liquidity resulting from the expected cash inflows. 47
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The following tables detail the components of our net interest income (te) and net interest margin. Three Months Ended June 30, 2020 March 31, 2020 June 30, 2019 (dollars in millions) Volume Interest (d) Rate
Volume Interest (d) Rate Volume Interest (d)
Rate
Average earning assets Commercial & real estate loans (te) (a)$ 17,931.8 $ 165.3 3.71
%
2,923.2 28.4 3.89 % 2,969.0 29.5 3.98 % 2,969.7 30.1 4.06 % Consumer loans 2,102.0 25.3 4.85 % 2,155.9 29.4 5.48 % 2,098.5 30.3 5.79 % Loan fees & late charges - 11.8 0.00 % - (0.6 ) 0.00 % - (0.1 ) 0.00 % Total loans (te) (b) 22,957.0 230.8 4.04 % 21,234.1 240.8 4.56 % 20,150.1 245.6 4.89 % Loans held for sale 90.0 0.6 2.89 % 40.3 0.6 6.17 % 27.9 0.3 4.96 %US Treasury and government agency securities 127.1 0.8 2.31 % 124.7 0.8 2.37 % 126.0 0.7 2.30 % Mortgage-backed securities and collateralized mortgage obligations 5,128.2 30.4 2.37 % 5,139.5 31.3 2.44 % 4,550.1 29.0 2.55 % Municipals (te) 866.3 6.6 3.06 % 877.2 6.7 3.07 % 906.8 7.1 3.12 % Other securities 8.0 0.1 4.31 % 8.0 0.1 4.29 % 3.5 0.0 3.30 % Total securities (te) (c) 6,129.6 37.9 2.47 % 6,149.4 38.9 2.53 % 5,586.4 36.8 2.64 % Total short-term investments 837.2 0.3 0.11 % 206.9 0.5 0.87 % 228.5 1.4 2.36 % Total earning assets (te)$ 30,013.8 $ 269.6 3.61 %$ 27,630.7 $ 280.8 4.08 %$ 25,992.9 $ 284.1 4.38 % Average interest-bearing liabilities Interest-bearing transaction and savings deposits$ 9,387.3 $ 4.4 0.19 %$ 8,798.5 $ 12.7 0.58 %$ 8,026.0 $ 15.3 0.76 % Time deposits 3,005.1 11.9 1.60 % 3,513.2 15.4 1.76 % 3,817.8 19.4 2.03 % Public funds 3,320.3 6.3 0.76 % 3,252.2 10.8 1.33 % 3,194.1 15.2 1.91 % Total interest-bearing deposits 15,712.7 22.6 0.58 % 15,563.9 38.9 1.01 % 15,037.9 49.9 1.33 % Short-term borrowings 2,254.7 2.3 0.40 % 2,150.2 4.5 0.83 % 1,617.8 7.8 1.94 % Long-term debt 276.9 3.6 5.19 % 231.4 2.8 4.76 % 232.3 2.8 4.86 % Total borrowings 2,531.6 5.9 0.93 % 2,381.6 7.3 1.22 % 1,850.1 10.6 2.31 % Total interest-bearing liabilities 18,244.3 28.5 0.63 % 17,945.5 46.2 1.03 % 16,888.0 60.5 1.44 % Net interest-free funding sources 11,769.5 9,685.2 9,104.9 Total cost of funds$ 30,013.8 $ 28.5 0.38 %$ 27,630.7 $ 46.2 0.67 %$ 25,992.9 $ 60.5 0.93 % Net interest spread (te)$ 241.1 2.98 %$ 234.6 3.05 %$ 223.6 2.94 % Net interest margin$ 30,013.8 $ 241.1 3.23 %$ 27,630.7 $ 234.6 3.41 %$ 25,992.9 $ 223.6 3.45 %
(a) Taxable equivalent (te) amounts were calculated using a federal income tax
rate of 21%.
(b) Includes nonaccrual loans.
(c) Average securities do not include unrealized holding gains/losses on
available for sale securities.
(d) Included in interest income is net purchase accounting accretion of
million,
2020,March 31, 2020 andJune 30, 2019 , respectively. 48
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Table of Contents Six Months Ended June 30, 2020 June 30, 2019 (dollars in millions) Volume Interest Rate Volume Interest Rate Average earning assets Commercial & real estate loans (te) (a)$ 17,020.5 $ 347.9 4.11 %$ 15,072.1 $ 365.8 4.89 % Residential mortgage loans 2,946.1 57.9 3.93 % 2,956.1 61.2 4.14 % Consumer loans 2,128.9 54.7 5.17 % 2,110.4 60.2 5.75 % Loan fees & late charges - 11.2 0.00 % - (1.0 ) 0.00 % Total loans (te) (b) 22,095.5 471.7 4.29 % 20,138.6 486.2 4.86 % Loans held for sale 65.1 1.3 3.91 % 24.3 0.6 4.96 %US Treasury and government agency securities 125.9 1.5 2.34 % 124.9 1.4 2.28 % Mortgage-backed securities and collateralized mortgage obligations 5,133.8 61.7 2.40 % 4,574.6 58.9 2.58 % Municipals (te) 871.8 13.4 3.06 % 918.3 14.5 3.14 % Other securities 8.0 0.2 4.30 % 3.5 0.1 3.19 % Total securities (te) (c) 6,139.5 76.8 2.50 % 5,621.3 74.9 2.66 % Total short-term investments 522.1 0.6 0.26 % 222.4 2.5 2.28 % Total earning assets (te)$ 28,822.2 $ 550.4 3.83 %$ 26,006.6 $ 564.2 4.36 % Average interest-bearing liabilities Interest-bearing transaction and savings deposits$ 9,092.9 $ 17.1 0.38 %$ 8,054.1 $ 30.0 0.75 % Time deposits 3,259.1 27.4 1.69 % 3,780.8 37.4 1.99 % Public funds 3,286.3 17.1 1.04 % 3,127.7 28.6 1.85 % Total interest-bearing deposits 15,638.3 61.6 0.79 % 14,962.6 96.0 1.29 % Short-term borrowings 2,202.4 6.7 0.61 % 1,651.2 15.9 1.93 % Long-term debt 254.2 6.3 5.00 % 228.6 5.6 4.92 % Total borrowings 2,456.6 13.0 1.07 % 1,879.8 21.5 2.31 % Total interest-bearing liabilities 18,094.9 74.6 0.83 % 16,842.4 117.5 1.41 % Net interest-free funding sources 10,727.3 9,164.2 Total cost of funds$ 28,822.2 $ 74.6 0.52 %$ 26,006.6 $ 117.5 0.91 % Net interest spread (te)$ 475.8 3.00 %$ 446.7 2.96 % Net interest margin$ 28,822.2 $ 475.8 3.31 %$ 26,006.6 $ 446.7 3.45 %
(a) Taxable equivalent (te) amounts were calculated using a federal income tax
rate of 21%.
(b) Includes nonaccrual loans.
(c) Average securities do not include unrealized holding gains/losses on
available for sale securities.
(d) Included in interest income is net purchase accounting accretion of
million and
respectively. Provision for Credit Losses During the second quarter of 2020, we recorded a provision for credit losses totaling$306.9 million , compared to$246.8 million in the first quarter of 2020 and$8.1 million in the second quarter of 2019. The provisions for credit losses recorded in the first and second quarters of 2020 include increases to the allowance for credit losses as a result of the impact of the pandemic and widespread economic shutdown. Approximately$146.8 million of the second quarter 2020 provision for credit losses was due to the impact of updated forecasts and continued elevated charge-offs. The updated Moody's macroeconomic forecast scenarios reflected a more severe impact to our markets, which are more heavily concentrated in hospitality, retail trade, healthcare and energy. The energy loan sale resulted in additional provision for credit losses of$160.1 million in the second quarter of 2020, which included charge-offs of$242.6 million and a reserve release of$82.5 million . For the six months endedJune 30, 2020 , we recorded a total provision for credit losses of$553.7 million , compared to$26.1 million for the six months endedJune 30, 2019 . The year-over-year increase was also related to the impact of the pandemic and widespread economic shutdown and the additional provision related to the energy loan sale. Net charge-offs in the second quarter of 2020 were$302.7 million , or 5.30% of average total loans on an annualized basis, compared to$43.8 million or 0.83% in the first quarter of 2020, and$7.2 million , or 0.14% in the second quarter of 2019. The second quarter of 2020 included$242.6 million of charge-offs on the energy loans moved to held for sale as a part of our strategy to reduce our concentration in that portfolio. The remaining$60.1 million of second quarter 2020 net charge-offs includes$20.7 million of healthcare-related and$25.9 million of energy-related charge-offs. The first quarter of 2020 included$35.9 million of energy-related net charge-offs, largely in the reserve based lending subsector.
The discussion of Allowance for Credit Losses and Asset Quality later in this Item provides additional information on these changes and on general credit quality.
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Table of Contents Noninterest Income Noninterest income totaled$73.9 million for the second quarter of 2020, down$10.4 million , or 12%, from the first quarter of 2020 and down$5.3 million , or 7%, compared to the second quarter of 2019. The decrease in noninterest income linked-quarter was primarily attributable to lower service charges as a result of higher average balances on deposit accounts following PPP loan fundings, stimulus payments and a lower level of consumer spending. Card fees were also negatively impacted by a lower level of spending. Almost all other categories of fees were down with the exception of secondary mortgage market fees and derivative fees. A$1.5 million gain on the sale of historic tax credits was also recorded in the first quarter of 2020. The decrease in noninterest income compared to the prior year was largely due to lower levels of income in all categories with the exception of secondary mortgage market fees and derivative fees, as a result of the current economic environment. The components of noninterest income are presented in the following table for the indicated periods. Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, (in thousands) 2020 2020 2019 2020 2019 Service charges on deposit accounts$ 15,518 $ 22,837 $ 20,723 $ 38,355 $ 41,090 Trust fees 14,160 14,806 15,904 28,966 31,028 Bank card and ATM fees 15,957 17,362 16,619 33,319 31,909 Investment and annuity fees and insurance commissions 5,366 7,150 6,591 12,516 13,119 Secondary mortgage market operations 9,808 6,053 4,433 15,861 8,159 Income from bank-owned life insurance 3,317 4,266 4,083 7,583 7,348 Credit related fees 2,609 3,065 2,937 5,674 5,532 Income from derivatives 4,108 3,871 3,600 7,979 4,409 Other miscellaneous 3,100 4,977 4,360 8,077 7,159 Total noninterest income$ 73,943 $ 84,387 $ 79,250 $ 158,330 $ 149,753 Service charges are composed of overdraft and insufficient funds fees, consumer, business and corporate analysis service charges, overdraft protection fees and other customer transaction-related charges. Service charges on deposits totaled$15.5 million for the second quarter of 2020, down$7.3 million , or 32%, from the first quarter of 2020 and down$5.2 million , or 25%, from the second quarter of 2019. The decrease from the prior quarter, as well as the same quarter last year, was largely due to lower overdraft activity and service-charge fees resulting from higher customer account balances due to economic stimulus, supplemental unemployment payments and PPP loan proceeds, as well as lower consumer spending due to quarantine restrictions and, to a lesser extent, a broadened policy for fee waivers. Trust fees decreased$0.6 million , or 4%, linked quarter and decreased$1.7 million , or 11%, from the same quarter a year ago. The decrease compared to both periods was largely due to the downturn in the market beginning at the end of the first quarter of 2020 and continuing through much of the second quarter of 2020, impacting assets under management and related trust fees. The estimated fair value of trust assets under management as ofJune 30, 2020 was$8.8 billion , compared to$8.3 billion atMarch 31, 2020 , and$9.4 billion atJune 30, 2019 . Bank card and ATM fees include interchange and other income from credit and debit card transactions, fees earned from processing card transactions for merchants, and fees earned from ATM transactions. Bank card and ATM fees totaled$16.0 million for the second quarter of 2020, down$1.4 million , or 8%, from the first quarter of 2020 and down$0.7 million , or 4%, from the same quarter last year. Economic uncertainty caused by the pandemic has resulted in an overall decrease in spending and transaction volume, which has negatively impacted income in this category. Investment and annuity fees and insurance commissions decreased$1.8 million , or 25%, compared to first quarter 2020 primarily due to decreases across most product lines due to both a disruption in the financial centers and a drop in the values of underlying portfolio holdings as a result of pandemic-related market volatility. Investment and annuity fees and insurance commissions decreased$1.2 million , or 19%, compared to second quarter 2019 largely due to the same reasons as the drop from the prior quarter, however corporate underwriting fees were up$0.2 million . Income from secondary mortgage market operations is comprised of income produced from the origination and sales of residential mortgage loans in the secondary market. Income from secondary mortgage market operations was$9.8 million in the second quarter of 2020, up$3.8 million , or 62%, from the first quarter of 2020 and up$5.4 million , or 121%, from the second quarter of 2019. Origination volume during the second quarter of 2020, particularly when compared to the second quarter of 2019, was positively impacted by the lower rate environment. Mortgage production for the second quarter of 2020 was up 67% compared to the first quarter of 2020 and up 76% compared to the second quarter of 2019. Secondary mortgage market operations income will vary based on origination volume and the timing of subsequent sales. To the extent low interest rate trends persist, mortgage loan production may remain elevated in the near term. 50
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Income from bank-owned life insurance is generated through insurance benefit proceeds as well as the growth of the cash surrender value of insurance contracts held. Income from bank-owned life insurance was$3.3 million in the second quarter of 2020, down$0.9 million , or 22%, from the first quarter of 2020 and down$0.8 million , or 19%, from the second quarter of 2019. The linked-quarter decrease is attributable to the fact that there were no benefit proceeds recorded in the second quarter of 2020, compared to$0.8 million in the first quarter of 2020 and$0.6 million in the second quarter of 2019. Credit related fees include unused commitment fees and letter of credit fees. Credit related fees were$2.6 million for the second quarter of 2020, down$0.5 million , or 15%, from the first quarter of 2020 and down$0.3 million , or 11%, from the second quarter of 2019. The linked quarter decrease was due to both lower unused commitment fees and letter of credit fees, with the decrease over the same quarter last year primarily due to lower unused commitment fees, as customers drew on their lines as a source of liquidity as a cautionary measure in response to the pandemic. Income from our customer interest rate derivative program totaled$4.1 million for the second quarter of 2020 compared to$3.9 million in the first quarter of 2020 and$3.6 million for the second quarter of 2019. Increased derivative income reflects higher transaction volume due to customer demand given the lower interest rates in the second quarter of 2020. Derivative income can be volatile and is dependent upon the composition of the portfolio, customer sales activity and market value adjustments due to market interest rate movement. Other miscellaneous income was$3.1 million in the second quarter of 2020, down$1.9 million compared to the first quarter of 2020 and down$1.3 million compared to the second quarter of 2019. The decrease compared to the prior quarter was largely due to a$1.5 million gain on the sale of historic tax credits in the prior quarter as well as a decrease of$0.5 million in income from investments in small business investment companies, partially offset by a$0.1 million increase in syndication fees. The decrease compared to the second quarter of 2019 includes a decrease of$1.4 million in income from investments in small business investment companies, partially offset by a$0.2 million increase in syndication fees. Noninterest income for the first six months of 2020 totaled$158.3 million , up$8.6 million , or 6% from the first six months of 2019. The impact of the lower rate environment drove a surge in activity in secondary mortgage market operations with fees up$7.7 million or 94%, as well as an increase in derivative activity, with fees up$3.6 million , or 81%. Also included in the first six months of 2020 was a$1.5 million gain on the sale of historic tax credits. Card fees were up$1.4 million , or 4%, due largely to increased activity as a result of the acquisition of MidSouth in the third quarter of 2019. These increases were partially offset by lower service charges, down$2.7 million and trust fees, down$2.1 million .
Noninterest Expense
Noninterest expense for the second quarter of 2020 was$196.5 million , down$6.8 million , or 3%, from the first quarter of 2020, and up$13.0 million , or 7%, from the second quarter of 2019. The linked quarter decrease is largely due to write downs of$9.8 million of equity interests recorded in the first quarter of 2020. The increase over the same quarter of 2019 is largely due to an increase in personnel costs related to annual merit raises as well as the acquisition of MidSouth and additional costs incurred in response to the pandemic. 51
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The components of noninterest expense for the periods indicated are presented in the following tables. Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, (in thousands) 2020 2020 2019 2020 2019 Compensation expense$ 98,756 $ 91,071 $ 87,747 $ 189,827 $ 171,715 Employee benefits 21,653 22,478 18,888 44,131 38,618 Personnel expense 120,409 113,549 106,635 233,958 210,333 Net occupancy expense 13,559 12,522 12,961 26,081 24,945 Equipment expense 4,752 4,617 4,342 9,369 9,021 Data processing expense 21,250 22,047 20,088 43,297 39,419 Professional services expense 10,985 9,741 9,665 20,726 17,833 Amortization of intangible assets 5,169 5,345 5,047 10,514 10,185 Deposit insurance and regulatory fees 5,116 5,815 4,755 10,931 10,161 Other real estate and foreclosed asset (income) expense (460 ) 10,130 395 9,670 (596 ) Advertising 2,696 4,234 3,253 6,930 6,333 Corporate value and franchise taxes 4,481 4,296 4,215 8,777 8,257 Telecommunications and postage 3,374 4,065 3,363 7,440 6,829 Entertainment and contributions 3,384 2,447 2,742 5,831 5,450 Travel expense 396 1,111 1,344 1,507 2,442 Printing and supplies 1,627 1,108 1,092 2,735 2,261 Tax credit investment amortization 961 961 1,234 1,921 2,372 Other retirement expense (6,337 ) (6,122 ) (4,152 ) (12,459 ) (8,257 ) Other miscellaneous 5,177 7,469 6,588 12,646 12,279 Total noninterest expense$ 196,539 $ 203,335 $
183,567
Personnel expense consists of salaries, incentive compensation, long-term incentives, payroll taxes, and other employee benefits such as 401(k), pension, and medical, life and disability insurance. Personnel expense totaled$120.4 million for the second quarter of 2020, up$6.9 million , or 6%, compared to the prior quarter due primarily to higher compensation expense related to annual merit increases, overtime related to an increase in the volume of mortgage origination and implementation of the PPP and other support costs in response to the pandemic. Incentive compensation increased$2.5 million from the prior quarter, primarily related to the increase in mortgage production. Compared to the second quarter of 2019, personnel costs were up$13.8 million , or 13%, primarily related to annual merit increases, and the acquisition of MidSouth. Occupancy and equipment expenses are primarily composed of lease expenses, depreciation, maintenance and repairs, rent, taxes, and other expenses related to equipment used by the Company. Occupancy and equipment expenses totaled$18.3 million in the second quarter of 2020, up$1.2 million , or 7%, from the first quarter of 2020 and up$1.0 million , or 6%, from the second quarter of 2019. The linked-quarter increase was largely due to additional cleaning expenses and the installation of additional safety measures related to the pandemic, as well as annual insurance payments made during the second quarter of 2020. The increase compared to the second quarter of 2019 is largely attributable to locations added in the MidSouth acquisition, as well as additional pandemic related costs, and equipment maintenance, partially offset by lower expenses associated with building maintenance and utilities. Data processing expense includes expenses related to third party technology processing and servicing costs, technology project costs and fees associated with bankcard and ATM transactions. Data processing expense was$21.3 million for the second quarter of 2020, down$0.8 million , or 4%, to the first quarter of 2020, and up$1.2 million , or 6%, compared to the second quarter of 2019. Data processing expense was down from the first quarter of 2020 due to lower level of ATM and card activity. The increase from the second quarter of 2019 was primarily due to investments in new technology, as well as expenses from increased card activity as a result of the acquisition of MidSouth.
Professional services expense for the second quarter of 2020 totaled
Deposit insurance and regulatory fees totaled$5.1 million , down$0.7 million , or 12%, from the first quarter of 2020 and up$0.4 million , or 8%, from the second quarter of 2019. The decrease from the prior quarter is largely due to the favorable impact of an improved liquidity position in the risk based assessment, due in part to favorable treatment of PPP loans. The increase compared to 2019 is primarily due to higher assessment base and rates, largely driven by the MidSouth acquisition. Corporate value and franchise tax expense for the second quarter of 2020 totaled$4.5 million , up$0.2 million , or 4%, compared to the prior quarter and$0.3 million , or 6%, compared to the same quarter last year. The increase from both the prior quarter and the first 52
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quarter of 2019 is primarily attributable to the impact the acquisition of MidSouth had on our operations and the corresponding effect on our corporate value and franchise tax calculations.
Business development-related expenses (including advertising, travel, entertainment and contributions) were$6.5 million for the second quarter of 2020, down$1.3 million , or 17%, from the first quarter of 2020 and$0.9 million , or 12%, from the second quarter of 2019. The linked-quarter decrease was largely due to a$1.5 million decrease in advertising and a reduction in travel as a result of the pandemic, partially offset by a$2.5 million contribution as an investment in Gulf South communities to help with the effects of the pandemic. The year over year decrease was largely due to a decrease in travel as a result of the pandemic and a decrease in advertising. Other real estate and foreclosed asset income of$0.5 million reflects gains in excess of losses for the second quarter of 2020, compared to expense of$10.1 million in the first quarter of 2020 and expense of$0.4 million in the second quarter of 2019. First quarter of 2020 expense included a non-cash write-down totaling$9.8 million of equity interests in two energy-related companies received in borrower bankruptcy restructurings. All other expenses, excluding amortization of intangibles, totaled$4.8 million for the second quarter of 2020, a decrease of$2.7 million , or 36% from the first quarter of 2020 and down$3.3 million , or 41% from the second quarter of 2019. The linked-quarter decrease was primarily due to branch write downs of$1.2 million in the first quarter of 2020 and lower telephone and postage expense. Year over year decrease was due to lower other retirement expense due to the performance of plan assets, lower printing and supplies expense and lower miscellaneous expense. Total noninterest expense totaled$399.9 million for the first six months of 2020, up$40.6 million or 11% from the same period last year. Personnel expense was up$23.6 million , or 11%, related to the MidSouth acquisition, merit-based compensation increases and other costs associated with the pandemic, including the implementation of the Paycheck Protection Program. Other real estate expense is up$10.3 million with a$9.8 million write-down of equity interest in energy related companies during the first quarter of 2020. Data processing was up$3.9 million with an increase in ATM and card fee activity with the acquisition of MidSouth, as well as an increase in software amortization. Professional services expense was up$2.9 million , or 16%. These increases were partially offset by a$4.2 million decrease in other retirement expense with better performance from plan assets. Income Taxes The effective income tax rate for the second quarter of 2020 was approximately 38.9%, compared to 17.5% in the first quarter of 2020 and 17.9% in the second quarter of 2019. Many factors impact the effective tax rate including, but not limited to, the level of pre-tax income and the relative impact of net tax benefits related to tax credit investments, tax-exempt interest, bank-owned life insurance, and nondeductible expenses. The increase in the second quarter 2020 effective tax rate was largely attributable to the sizable pre-tax loss incurred year-to-date, which caused a significant decrease in our projected annual pre-tax income as compared to the prior quarter. Additionally, the effective tax rate could be impacted by discrete items that may occur in any given period, such as tax benefits from share-based compensation and changes in valuation allowances that are recognized as a separate component from continuing operations in the interim period the items impact. The effect of a change in tax laws or rates on existing deferred tax assets and liabilities are also recognized as a discrete item in the interim period that includes the enactment date of the change. As such, we recognized a discrete benefit of$7.1 million in the first quarter of 2020 related to our intent to carryback a net operating loss attribute that we inherited from an acquired entity to a 35% statutory tax rate year (provided for under the CARES Act). Our effective tax rate has historically varied from the federal statutory rate primarily because of tax-exempt income and tax credits. Interest income on bonds issued by or loans to state and municipal governments and authorities, and earnings from the life insurance contract program are the major components of tax-exempt income. The main source of tax credits has been investments in tax-advantaged securities and tax credit projects. These investments are made primarily in the markets we serve and are directed at tax credits issued under the Federal and State New Market Tax Credit ("NMTC") programs, Low-Income Housing Tax Credit ("LIHTC") programs, as well as pre-2018Qualified Zone Academy Bonds ("QZAB") and Qualified School Construction Bonds ("QSCB"). These investments generate tax credits, which reduce current and future taxes and are recognized when earned as a benefit in the provision for income taxes. We have invested in NMTC projects through investments in our own Community Development Entity ("CDE"), as well as other unrelated CDEs. Federal tax credits from NMTC investments are recognized over a seven-year period, while recognition of the 53
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benefits from state tax credits varies from three to five years. Our LIHTC investments to date are through variable interest entities for which the Company is not the primary beneficiary and, therefore, are not consolidated. LIHTC credits from the affordable housing projects are recognized over a ten-year period, beginning with the year the rental activity begins, as a reduction of the provision for income taxes. Based on tax credit investments that have been made to date in 2020, we expect to realize benefits from federal and state tax credits over the next three years totaling$7.8 million ,$8.6 million and$8.5 million for 2021, 2022, and 2023, respectively. We intend to continue making investments in tax credit projects. However, our ability to access new credits will depend upon, among other factors, federal and state tax policies and the level of competition for such credits. Selected Financial Data The following tables contain selected financial data as of the dates and for the periods indicated. Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2020 2020 2019 2020 2019 Common Share Data Earnings per share: Basic$ (1.36 ) $ (1.28 ) $ 1.01 $ (2.64 ) $ 1.92 Diluted$ (1.36 ) $ (1.28 ) $ 1.01 $ (2.64 ) $ 1.92 Cash dividends paid$ 0.27 $ 0.27 $ 0.27 $ 0.54 $ 0.54 Book value per share (period-end)$ 38.41 $ 39.65 $ 38.70 $ 38.41 $ 38.70 Tangible book value per share (period-end)$ 27.38 $ 28.56 $ 28.46 $ 27.38 $ 28.46 Weighted average number of shares (000s): Basic 86,301 87,186 85,728 86,744 85,708 Diluted 86,301 87,186 85,835 86,744 85,810 Period-end number of shares (000s) 86,342 86,275 85,759 86,342 85,759 Three Months Ended Six Months Ended June 30, March 31, June 30 June 30 (in thousands) 2020 2020 2019 2020 2019 Income Statement: Interest income$ 266,342 $ 277,343 $ 280,378 $ 543,685 $ 556,661 Interest income (te) (a) 269,590 280,791 284,096 550,381 564,203 Interest expense 28,476 46,155 60,510 74,631 117,539 Net interest income (te) 241,114 234,636 223,586 475,750 446,664 Provision for credit losses 306,898 246,793 8,088 553,691 26,131 Noninterest income 73,943 84,387 79,250 158,330 149,753 Noninterest expense (excluding amortization of intangibles) 191,370 197,990 178,520 389,360 349,082 Amortization of intangibles 5,169 5,345 5,047 10,514 10,185 Income before income taxes (191,628 ) (134,553 ) 107,463 (326,181 ) 203,477 Income tax expense (benefit) (74,556 ) (23,520 ) 19,186 (98,076 ) 36,036 Net income (loss)$ (117,072 ) $ (111,033 ) $ 88,277 $ (228,105 ) $ 167,441 For informational purposes - included above, pre-tax Provision for credit loss associated with energy loan sale$ 160,101 - -$ 160,101 - 54
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Table of Contents Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, 2020 2020 2019 2020 2019 Performance Ratios Return on average assets (1.42 )% (1.46 )% 1.24 % (1.44 )% 1.18 % Return on average common equity (13.59 )% (12.72 )% 10.96 % (13.15 )% 10.64 % Return on average tangible common equity (18.75 )% (17.51 )% 15.07 % (18.13 )% 14.73 % Earning asset yield (te) 3.61 % 4.08 % 4.38 % 3.83 % 4.36 % Total cost of funds 0.38 % 0.67 % 0.93 % 0.52 % 0.91 % Net Interest Margin (te) 3.23 % 3.41 % 3.45 % 3.31 % 3.45 % Noninterest income to total revenue (te) 23.74 % 26.45 % 26.17 % 24.97 % 25.11 % Efficiency ratio (b) 60.74 % 62.06 % 58.95 % 61.41 % 58.53 % Average loan/deposit ratio 85.97 % 87.28 % 87.09 % 86.60 % 87.08 % FTE employees (period-end) 4,196 4,148 3,930 4,196 3,930 Capital Ratios Common stockholders' equity to total assets 9.98 % 10.77 % 11.54 % 9.98 % 11.54 % Tangible common equity ratio (c) 7.33 % 8.00 % 8.75 % 7.33 % 8.75 %
(a) Taxable equivalent (te) amounts were calculated using a federal income tax
rate of 21%.
(b) The efficiency ratio is noninterest expense to total net interest (te) and
noninterest income, excluding amortization of purchased intangibles and
nonoperating items.
(c) The tangible common equity ratio is common stockholders' equity less
intangible assets divided by total assets less intangible assets. Three Months Ended Six Months Ended June 30, March 31, June 30, June 30, ($ in thousands) 2020 2020 2019 2020 2019 Asset Quality Information Nonaccrual loans (a) (b)$ 183,979 $ 254,058 $ 209,831 $ 183,979 $ 209,831 Restructured loans - still accruing 9,848 34,251 101,250 9,848 101,250 Total nonperforming loans 193,827 288,309 311,081 193,827 311,081 ORE and foreclosed assets 18,724 18,460 27,520 18,724 27,520 Total nonperforming assets$ 212,551 $ 306,769 $ 338,601 $ 212,551 $ 338,601 Accruing loans 90 days past due (c)$ 5,230 $ 17,790 $ 6,493 $ 5,230 $ 6,493 Net charge-offs 302,684 43,764 7,151 346,448 25,020 Allowance for loan losses 442,638 426,003 195,625 442,638 195,625 Reserve for unfunded lending commitments 36,571 48,992 - 36,571 - Allowance for credit losses 479,209 474,995 195,625 479,209 195,625 Total provision for credit losses 306,898 246,793 8,088 553,691 26,131 Ratios: Nonperforming assets to loans, ORE and foreclosed assets 0.94 % 1.42 % 1.68 % 0.94 % 1.68 % Accruing loans 90 days past due to loans 0.02 % 0.08 % 0.03 % 0.02 % 0.03 % Nonperforming assets + accruing loans 90 days past due to loans, ORE and foreclosed assets 0.96 % 1.51 % 1.71 % 0.96 % 1.71 % Net charge-offs to average loans 5.30 % 0.83 % 0.14 % 3.15 % 0.25 % Allowance for loan losses to period-end loans 1.96 % 1.98 % 0.97 % 1.96 % 0.97 % Allowance for credit losses to period-end loans 2.12 % 2.21 % 0.97 % 2.12 % 0.97 % Allowance for loan losses to nonperforming loans + accruing loans 90 days past due 222.37 % 139.17 % 61.60 % 222.37 % 61.60 % For informational purposes - included above Provision for credit loss associated with energy loan sale$ 160,101 - -$ 160,101 - Charge-offs associated with energy loan sale 242,628 - - 242,628 -
(a) Included in nonaccrual loans are nonaccruing restructured loans totaling
2020, and
(b) Nonaccrual loans do not include purchased credit impaired loans accounted for
under ASC 310-30 that would have otherwise been considered nonperforming,
totaling
ASC 326, such metrics include both originated and acquired balances. 55
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(c) Loans past due 90 days or more do not include purchased credit impaired loans
accounted for under ASC 310-30 that would have otherwise been considered
delinquent, totaling
adoption of ASC 326, such metrics include both originated and acquired
balances.
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